In this Oct. 14, 2008 photo, the view of the frack pad on Trax Farms is shown in Peters Township, Pa. The farm has leased part of its property in Union Township, Washington County to Chesapeake Energy Corporation for Marcellus Shale gas drilling. (AP Photo/Tribune-Review, Jasmine Goldband)

Steve Craig is used to oil companies operating near his ranch in the smooth, rounded hills of southern Monterey County.

But Craig draws the line at "fracking."

A company called Venoco Inc. wants to try hydraulic fracturing in the Hames Valley near Bradley, using a high-pressure blend of water, sand and chemicals to crack rocks deep underground and release oil locked in the stone.

The same technique has revolutionized America's natural gas business in the past five years, boosting production and driving down prices. It has also been blamed for tainting groundwater near fracked wells, a charge that drilling companies deny.

Anyone living near the Hames Valley has long experience with the oil industry. The San Ardo oil field - a thicket of pipes, power lines and pump jacks - sits about 5 miles up Highway 101, a source of petroleum and jobs since 1947.

But the possibility of polluted water alarms Craig and others, who have appealed to the county government to block Venoco. The fact that California, so far, does not regulate fracking bothers Craig just as much.

"The agencies have not asked, 'Who's drilling? Which compounds are being used?' " said Craig, who directs a land-preservation group in Monterey County. " 'Where does it go? Does it move up through a fault in the next big earthquake?' No one's asking these questions."

The fight over fracking has finally come to California.

Debates over banning or restricting the practice have raged in New York, Pennsylvania and other states. The U.S. government is studying its safety, while the oil and gas industry maintains that fracking poses no threat to the environment or public health.

Until recently, California remained out of the fray because environmentalists and politicians believed fracking wasn't happening here.

But it is.

Venoco fracked two wells in Santa Barbara County earlier this year, much to the surprise of local officials. The company received permits from Monterey County to drill up to nine wells in the Hames Valley, but Craig and other activists appealed the permits. Farther north, the company plans to frack 20 wells in the Sacramento Basin this year, according to one of its financial reports.

Fracking not tracked in state

Occidental Petroleum Corp., located in Los Angeles, fracked wells in Kern and Ventura counties this spring. The U.S. Bureau of Land Management plans to sell oil-development leases next month in Monterey County, atop a geologic formation that may require fracking to produce much oil or gas.

The small number of individual projects that have come to light in California suggests that the practice is nowhere near as widespread here as it is in states such as Pennsylvania and Texas, where fracking has been used on hundreds of new wells. But no one knows for certain because no one has kept track.

The California agency that regulates the oil and gas industry does not record the number and location of fracked wells, a fact that has astonished and angered some politicians and environmentalists. Nor does the agency - the Division of Oil, Gas & Geothermal Resources - require companies to disclose the chemicals they use in the process.

That may change. In June, the Assembly passed legislation sponsored by Assemblyman Bob Wieckowski, D-Fremont, that would force companies to report the location of each new fracked well as well as the chemicals used. The state, he said, must do a better job monitoring a practice that may become common here.

"This is a baby step," Wieckowski said. "Most of the time we're reactive in government. We wait until the hurricane hits, and then we say, 'Maybe we shouldn't have built homes there.' "

Hydraulic fracturing involves pumping underground large quantities of pressurized water and sand, along with a mixture of chemicals. (The chemicals, which can include household substances such as citric acid and carcinogens such as benzene, typically make up 1 percent of all the material pumped into the well.) The intense pressure breaks the rock, creating a lattice of tiny cracks that the sand props open. Natural gas or oil trapped in the stone flow through the fissures toward the well.

In use since the 1940s, fracking is hardly new. But improvements in the technique, combined with other practices such as horizontal drilling, have unleashed a fracking boom.

Hydraulic fracturing has opened up access to natural gas deposits locked inside shale rock formations, deposits that in the past were considered impractical to tap. The biggest of those formations, the Marcellus Shale, stretches beneath New York, Ohio, Pennsylvania and West Virginia and holds an estimated 410 trillion cubic feet of gas, according to the U.S. Energy Information Administration. That's enough to meet all of America's natural gas needs for 17 years.

As fracking's use spread in the past five or six years, U.S. shale gas production jumped, rising from 1 trillion cubic feet in 2006 to 4.8 trillion cubic feet last year. Natural gas prices plunged 37 percent during the same period as a result. Home heating bills fell, too.

The boom, however, triggered a backlash.

Homeowners living near fracked wells complained that their drinking water had been contaminated with methane - the main component of natural gas - or other chemicals. Some discovered they could set fire to the methane bubbling from their tap water. A Duke University study earlier this year found elevated concentrations of methane in drinking-water wells that were close to fracking wells.

Impact on water unknown

A poorly designed and executed well can allow methane to migrate toward the surface along the well's exterior, said Erik Milito, director of exploration and production for the American Petroleum Institute, an oil-industry trade group. But that isn't the case if the well is built right, protected from the surrounding rock by steel pipe and concrete.

And it is extremely unlikely, Milito said, for gas released by fracking to reach an aquifer by any other route.

"It's the geology," he said. "In between the aquifer and the well, it's thousands of feet of impermeable rock."

So far, no complaints about contaminated water have surfaced in California, according to Wieckowski and others studying the issue.

"We don't have smoking guns here, with people lighting their faucets on fire," said Bill Allayaud, California director of government relations for the Environmental Working Group. "It's possible we have groundwater contamination. We don't appear to. But we don't have any regulatory system to tell us that."

Most fracking in California appears to target oil deposits, rather than natural gas.

Drillers here have focused their attention on the Monterey Shale, which lies below the southern San Joaquin Valley and the coastal hills of Central California. Many of the state's big, aging oil fields - some of which have been pumped for a century - spring from the Monterey Shale. But large amounts of petroleum may remain locked in rock formations too tight to tap with conventional drilling.

How much? A recent Energy Information Administration report estimated the Monterey Shale may hold 15.4 billion barrels of recoverable oil, more than any other shale formation in the United States. The country uses about 19 million barrels per day.

The Monterey Shale's potential, however, remains unproved. California's largest oil company, Chevron Corp., has been exploring the formation but remains unconvinced that it's worth the investment.

"At this point, we just don't see the volumetric production that delivers enough barrels at a rate to make it economically competitive," said George Kirkland, Chevron's executive vice president, speaking on a recent conference call with Wall Street analysts. "But we've got more work to do."

Venoco, however, is betting big on the Monterey Shale. The company, based in Denver, plans to spend roughly $100 million exploring the formation this year, according to one of the company's financial reports. By the end of the first quarter, the company had drilled 18 wells in the formation.

Venoco did not return calls seeking comment for this story.

Not all drilling in the Monterey Shale involves fracking, however. In a recent conference call with financial analysts, Venoco Chief Executive Officer Timothy Marquez said that conventional drilling techniques appear to work better, at least in the wells Venoco has drilled so far.

"When we look at the results to date, our analysis is that the majority of the (Monterey) play will be developed using less expensive vertical wells using acid instead of the much more expensive fracking," Marquez said.

The company fracked two wells on the edge of Santa Barbara County's wine country, between the towns of Los Alamos and Orcutt. County officials had issued Venoco permits to drill the wells but didn't realize until afterward that fracking would be involved, said Doug Anthony, the county's deputy director of planning and development.

Regulation bill in the works

The discovery prompted tense community meetings, as residents worried that fracking could contaminate their water. The county warned Venoco that if the company wanted to frack any more wells, it would have to file an oil production plan and seek an additional permit for each well. Otherwise, Venoco could face fines.

"We're really trying to get to get up to speed with this," Anthony said. "We've been talking to the industry and saying, 'Come on, let's figure this out.' They tell you it's been going on here already. Well, OK, where? And to what extent? And how much water did you use?"

County governments have limited authority over oil and gas operations in California. The state's Division of Oil, Gas & Geothermal Resources serves as the industry's main regulator here. However, the division, which is part of the state Department of Conservation, does not have specific regulations for fracking, regarding it as just one of several techniques for wresting more oil and natural gas from the earth.

The oil industry views Wieckowski's bill with caution. Different companies use different chemicals in different proportions to frack wells. Each regards its exact recipe as a trade secret, a potential edge against the competition.

So Wieckowski is seeking a compromise. His bill would require companies to make public the chemicals used in each well, but not the exact proportions. That approach may work. Some companies, including Occidental, already post that information on a publicly accessible website, called FracFocus.

"We're optimistic that the bill will end up being something we can support," said Tupper Hull, spokeswoman for the Western States Petroleum Association, a trade group. "He seems to appreciate that there's a need to have some protection for competitively sensitive information."